Patient hurdles, supply limits pose challenges for Texas CBD businesses

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Texas state flag

Texas is weeks from the opening of CBD dispensaries many thought would never appear in the deep-red state.

But it’s far from certain whether Texas’ highly restrictive law will translate into a viable market for the handful of businesses allowed to produce and sell CBD products, as the customer base could be tiny.

Patients can use CBD for epilepsy only if two traditional drugs have failed. They also must jump through regulatory hoops.

In addition, Texas allows just three vertically integrated dispensaries in the nation’s second-most populous state – with 28 million residents – and there’s a dearth of participating doctors.

“I hope Texas has figured it out, because there are a lot of people in this state who want access to this medicine,” said Morris Denton, CEO of Compassionate Cultivation, one of the state’s three licensed dispensaries.

Program details

Here’s what Texas’ cannabis program looks like so far:

  • CBD may be used only for intractable epilepsy.
  • The CBD can be derived from hemp or marijuana, provided the end product contains at least 10% CBD and no more than 0.5% THC.
  • Patients can’t buy raw flower or smokable concentrate, only edible oils.
  • Signoff is required from two neurologists or doctors who specialize in epilepsy treatment, known as epileptologists. Only seven doctors are known to be participating in Texas’ program.
  • Retailers must grow and process their own hemp or cannabis, which must be cultivated indoors and adjacent to the dispensary.
  • Retailers will be allowed to deliver oils to qualifying patients.

No date is set in law for when sales begin.

One of the dispensaries, Cansortium Texas, has said it plans to be open by the end of the year in Schulenburg, about halfway between Houston and San Antonio.

Compassionate Cultivation is aiming for a January opening near Austin, and Surterra Texas hasn’t announced when it is opening.

Big question mark

So will dispensaries see a flood of patients when they open? It’s unclear, as there are no solid estimates for the state’s potential patient pool.

Texas’ patient registry is open, but there is no way to know how many patients may be on it.

Patients are entered directly into the registry by physicians, not by state health regulators, and then dispensaries can find out the patients’ identities.

Denton hasn’t yet seen one.

“That is the giant question: How many patients are going to come online?” Denton said. “I don’t know the answer to that. We can only guess.”

Broad medical estimates of how many people have epilepsy are fuzzy, and there is no way to know many of those epileptics have tried two different drugs without success.

Denton estimates there might be roughly 280,000 epileptics in Texas, and perhaps 93,000 of those may have “intractable epilepsy.”

But he won’t say how many patients he’s expecting, and only a fraction of Texans with intractable epilepsy will actually participate in the CBD program, at least initially.

Texas’ cannabis patient count may be forever a mystery because of medical privacy laws.

Because marijuana is still listed as a Schedule 1 drug on the federal level, physicians aren’t allowed to prescribe it. Doctors in states where medical marijuana is legal can “recommend” cannabis treatments, and those recommendations can be counted and reported to the public.

Texas, however, calls for physicians to “prescribe” CBD, making it a violation of medical privacy laws to report the number of prescriptions.

“I’m not concerned about the number of patients we have,” Denton said, “I’m concerned about the number of doctors we have prescribing.

“If you have a limited number of doctors, you have a limited number of patients.”

Critics say Texas’ CBD program is doomed because of the high hurdle patients face and the three-dispensary limit.

The co-founder of the Texas Cannabis Industry Association, Patrick Moran, calls Texas’ CBD law “incredibly limited and increasingly flawed.”

Moran failed to win one of the three dispensary licenses for a grow north of Dallas.

“Honestly, we’re at a little bit of a loss as to how this is going to go,” Moran said. “The three business with licenses, God bless them, we hope that they’re successful. But the way the law is written, we don’t think it’s going to work.”

Moran is holding out hope that Texas will expand its CBD program in 2019, when state lawmakers return to work and can see how it’s working.

Right now, he says, Texas politicians are skeptical of anyone working in cannabis.

“They think we’re running a scam, that we’re all stoners,” Moran said.

Denton shares Moran’s hope that a year of limited CBD sales will change minds in Texas about cannabis’ potential.

“This is just the start of Texas,” Denton said.

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